Say It Ain't So, Smarty

Birdstone. Until recently, the name carried little recognition and even less respect. That all changed in Saturday's Belmont Stakes, the third leg of horse racing's Triple Crown. The unheralded 36-1 long shot nipped Smarty Jones at the wire, denying the sentimental favorite a place in racing immortality and dashing the collective hopes of a nation primed to witness the first Triple Crown win since Affirmed managed the feat in 1978.

Smarty Jones, a small red chestnut with a humble pedigree, had captured the hearts and imaginations of millions, rekindling a newfound interest in the sport of thoroughbred racing. A boisterous, record-shattering crowd of more than 120,000 showed up at Belmont Park, most of them eager to see the Pennsylvania-bred colt keep his undefeated streak intact for one more race. Alas, for the sixth time in the past eight years, a horse poised to earn the Triple Crown stumbled in the Belmont, a grueling 1.5 mile "test of the champion."

Despite the lack of a storybook ending, Saturday's race was profitable for many, and not just the few who had the prescience to redeem a $74 winning ticket for a $2 bet on Birdstone. Racetracks across the country cashed in on Smarty Jones' popularity -- many of them offering free $2 souvenir win tickets with the price of admission. Casual fans also tuned into the contest; General Electric's (NYSE:GE) NBC telecast earned a 13.4 rating, the highest mark in 27 years.

Most racetracks are privately owned or state-managed, but a handful are operated by public companies, such as Harrah's (NYSE:HET) Louisiana Downs and Churchhill Downs (NASDAQ:CHDN).

One of the major recipients of riches from the fairy-tale run has been Penn National Gaming (NASDAQ:PENN), owner of 14 racetracks and off-track betting (OTB) facilities in the state Smarty Jones calls home (when he's not galloping to victories at the Kentucky Derby or elsewhere). On-track attendance and wagering at the flagship Penn National Race Course surged 68% and 88%, respectively, for last month's Preakness -- numbers that were likely topped by Saturday's event. The company recently posted record first-quarter revenue and earnings, and unprecedented wagering on the hometown hero should carry that momentum through the next quarter.

The triple-crown frenzy has also found other outlets. Area Wal-Mart (NYSE:WMT), Kmart (NASDAQ:KMRT ), and even Dillard's (NYSE:DDS) stores were reporting brisk sales of Smarty Jones merchandise, which totaled more than $200,000 in the first 72 hours after being released last month -- well before Triple Crown mania had reached a crescendo.

After all the tickets have been counted, estimates indicate that more money will have been wagered on Smarty Jones than on any other single horse in history. The total handle including simulcasts for the 13-race card set a new record at $114.8 million, surpassing the $103.3 million wagered at the Breeders Cup races in 2001. This is welcome news to Scientific Games (NASDAQ:SGMS), the firm that controls two-thirds of the $20 billion pari-mutuel gaming market and receives a share of all money wagered on their machines.

By no means does the Smarty Jones phenomenon, by itself, justify an investment in any of these companies. However, his exploits have breathed new life into an industry struggling against the proliferation of casino gaming. As for Smarty Jones, no sympathy is necessary. After a well-deserved rest, he will likely seek redemption on his home turf over Labor Day Weekend in the Pennsylvania Derby.

Did you join the Smarty party for Saturday's race? Lament his loss with others on the Horse Racing discussion board.

Of the companies mentioned, Fool contributor Nathan Slaughter owns only GE. He would like to know exactly how many quarts of oats Smarty Jones' owners could stockpile with his $7.5 million in career earnings.